Little success for enterprise zonesBy ANTHONY WARREN,
Efforts to spur new development through the creation of enterprise zones have been less fruitful than city leaders had hoped.
In 2014, the Jackson City Council approved creating five enterprise zones across the city. The zones took in economically distressed areas, and were designed to give developers building in them a leg up when applying for New Market Tax Credits (NMTCs.) One district takes in portions of Fondren and Belhaven.
Four years later, the zones have generated little interest, with one project being canceled after the company was bought out.
“They were meant to attract investments to low-income areas but they have not made much of a difference,” said Jackson Director of Planning Mukesh Kumar.
Kumar isn’t surprised by the zones’ lack of success, and points to reports saying the zones have been equally unsuccessful in other parts of the country. “I have not recalled (a) study showing any significant positive result,” he said.
While Fondren and Belhaven are not considered economically distressed, the zone covering those areas takes in neighborhoods in Belhaven Heights, and areas on Meadowbrook and the west side of North State Street.Developers building in those zones are given extra consideration when applying for NMTCs. The tax credits are incentives for building in an under-served area.
Developers are awarded the credits through community development entities, or CDEs. Each year, CDEs like Hope Credit Union apply for and receive an allocation of NMTCs from the U.S. Department of the Treasury. Entities that receive the credits then sell the credits to investors, and use the funds raised to help finance qualifying projects.
For their part, investors usually pay 80 or 85 cents on the dollar for the credits and receive a 39 percent tax credit that they can use over a seven-year period.
Prior to the creation of the zones, developments in those areas were still eligible for the credits, but were less competitive when competing with projects in “severe distress” areas.
Severe distress areas are regions that have poverty rates greater than 30 percent of the statewide average; median family income that does not exceed 60 percent of the statewide median income; and unemployment 1.5 times greater than the national average.
For enterprise zones, the areas must have a poverty rate 25 percent greater than the statewide average median income that does not exceed 70 percent of the statewide median income for families; and unemployment rates 1.25 times greater than the national average.
One project planned for the Fondren/Belhaven zone fell through years ago. The firm, Venyu, was planning to build a $35 million data center and telehealth center inside the old Meadowbrook Road McRae’s building. The firm approached local developers prior to the creation of the district.
The firm was awarded $7.45 million in federal NMTCs, as well as a small amount in Mississippi NMTCs.
However, Venyu was bought out in 2015, and the plans fell through.
Two hotels coming to Fondren will also be located in the Fondren/Belhaven zone, but neither are being built with NMTCs.